Lands’ End shares drop on first day as a public company

Clothing retailer was spun off from Sears, which bought it in 2002 for nearly $2 billion U.S.

Lands’ End was publicly traded before Sears Holdings Corp. purchased it in 2002 for nearly $2 billion (U.S.). Sears hasn’t had much success with it though, and announced in December that it was going to spin off the clothing business as a separate company.
AP FILE PHOTO

By:The Associated Press, Published on Mon Apr 07 2014

NEW YORK, N.Y.—Lands’ End shares fell in its first day as a separate public company after being spun off from Sears.

The company’s stock closed down $2.12 (U.S.), or about 6 per cent, to $29.55 in Monday trading.

Lands’ End was publicly traded before Sears Holdings Corp. purchased it in 2002 for nearly $2 billion (U.S.). Sears hasn’t had much success with it though, and announced in December that it was going to spin off the clothing business as a separate company by distributing stock to its shareholders. It closed on the spinoff on Friday.

Sears received gross proceeds of $500 million from the separation. That consisted of a cash dividend paid by Lands’ End to a subsidiary of Sears Holdings before the spinoff.

The spinoff by Sears has been viewed as a way to unlock value for investors as the retailer’s core business struggles after years of sales declines. The company, which also runs Kmart stores, has been closing some unprofitable stores and sold some store leases in Canada.

Sears has spun off other businesses over the past three years, including its Hometown and Sears Outlet stores and its Orchard Supply Hardware Stores, to raise cash. It has also said it is considering separating its auto centre business.

Billionaire hedge fund manager and Sears chairman Eddie Lampert, who took over as CEO in February 2013, has been under intense pressure to turn around the business. Sears has had trouble adapting as bigger, nimbler rivals such as Wal-Mart Stores Inc. and Home Depot Inc. have stolen away customers over the years.

In 2012 Sears announced plans to restore profitability by cutting costs, reducing inventory, selling off some assets and spinning off others. Those moves helped the Hoffman Estates, Ill., company reduce net debt by $400 million and generated $1.8 billion in cash from the asset sales. Sears also has been building a loyalty program called Shop Your Way, which accounts for a majority of its sales and has tens of millions of active customers.

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